Deficit commission may target mortgage deductions; Update: Take the poll!

posted at 1:36 pm on June 9, 2010 by Ed Morrissey

Want a  tax hike that will really hit home … literally?  The Hill reported yesterday afternoon that momentum has picked up for capping the mortgage-interest deduction that has incentivized real-estate purchases.  It comes as the National Commission on Fiscal Responsibility and Reform looks at means-testing a number of programs, including Social Security and Medicare:

The popular tax break for mortgage interest, once considered untouchable, is falling under the scrutiny of policymakers and economic experts seeking ways to close huge deficits.

Although Congress last year rejected the White House’s proposed cut to the amount wealthier taxpayers can deduct for home mortgage interest payments, the administration included it again in its 2010 budget — saying it could save $208 billion over the next decade.

And now that sentiment has turned against all the federal red ink — and cost-cutting is in vogue — Democrats on President Barack Obama’s financial commission are considering the wisdom of permanent tax breaks such as the mortgage deduction and corporate deferral. Calling them “tax entitlements,” senior Democratic lawmakers have argued they should be on the table for reform just like traditional entitlement programs Medicare, Social Security and Medicaid. …

Policymakers seeking savings have tried to cap the mortgage interest deduction before — and failed. Five years ago, a bipartisan tax reform commission created by President George W. Bush proposed ending the mortgage tax break. But the commission’s plan stalled in Congress, partly because of popular support for the mortgage deduction.

Obama’s proposal, which would cut the deduction rate for itemized expenses for those making more than $250,000 to the rate paid by the middle class, was panned last year by members of both parties. They worried about its effect, during a recession, on charitable deductions and the housing market.

Flat-tax advocates had to deal with serious opposition to the notion of eliminating the mortgage-interest deduction entirely by arguing that a flat rate was easier to administer and didn’t put one American in the position of paying another’s mortgage interest.  For fair-tax advocates, the entire issue is moot when one ends the income tax altogether and instead taxes consumption.  This proposal doesn’t go as far as the two broad conservative tax-reform proposals, which is probably one of the reasons a means-test is back under serious consideration for this staple tax incentive.

However, that doesn’t mean it will be simple to pass.  First, assigning a “rich” label to the $250K earning level is ridiculous.  That would include a lot of small-business owners who report business income in personal returns.  The sudden elimination of the tax incentive will upend their financial calculations and make future home purchases a questionable and riskier venture.  It might incentivize the “rich” to rent or lease property instead of purchasing it, which won’t help this residential real estate market.

Still, conservatives should consider whether the government should prop up the housing market at all with this incentive, which is in effect a redistribution of wealth to the landed.  Its intent is social engineering, a task that the Right abhors in other contexts — like, say, the CRA and Fannie/Freddie virtual subsidies to the subprime market, a task which has shifted of late to FHA.  Is it time to means-test the mortgage deduction or eliminate it altogether?  Take the poll:


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Comment pages: 1 2

Great – and maybe do what Canada does – and charge sales tax on every sale of a home. SHEEEESH!!

honsy on June 9, 2010 at 1:40 PM

Getting rid of the Mortgage deduction isn’t going to help or solve any problems and it still won’t bring as much money is as people think it will.

All it is doing is hurting everyone. Rich to Poor.

upinak on June 9, 2010 at 1:40 PM

Where’s the “Don’t touch mortgage interest deduction until I pay off the mortgage?”

Dusty on June 9, 2010 at 1:41 PM

Chuck it. It’s expensive and it is government social engineering. Get rid of all the housing programs as well that artificially sets the price of housing, no more deadbeat bailouts.

Apologetic California on June 9, 2010 at 1:41 PM

With the freaking marriage tax, trying to get rid of the mortgage deductions, the time frame of the federal tax on income about to expire. How much money are any of us going to have to live on? 30% maybe?

upinak on June 9, 2010 at 1:42 PM

Yes, but if there is no flat tax, this is simply socking it to homeowners compared to what they previously paid. This is the segment of society that in general pays the most for local county taxes as well. You like your fire department and schools? Thank a homeowner. Now take away one of the major deductions (in my particular case THE major deduction) plus keep slapping increases in every tax category (oh and be sure to increase the value of my house EVERY freaking year for tax assessment in the middle of a depression) and you are going to end up with the most productive area of society even more angry than before. Galt indeed.

WitchDoctor on June 9, 2010 at 1:43 PM

Apologetic California on June 9, 2010 at 1:41 PM

Says you.

I pay my mortgage on time. I am also going to be selling my house and building soon and building so I can get as much money out of the house as I can.. like on demand hot water, insulation 2 times more then code states… stuff like that.

You must not own a house.

upinak on June 9, 2010 at 1:44 PM

This will seriously hurt an already hurting real estate market.Do you all remember what happened when they removed deductions for “luxury” items like yachts , The industry crashed. Just keep your hands off the mortgage deduction.When Bushes tax cuts expire in January all hell is going to break loose already.

sandee on June 9, 2010 at 1:47 PM

We need the clip of Dear Liar saying that for those making less than $250,000, their taxes won’t go up. Out and out liar.

How about we abolish the Department of Education first.

rbj on June 9, 2010 at 1:49 PM

What’s important in this story is that a) this isn’t a new idea, 2) they’re still playing the same old tax games, and III) this isn’t even scratching the surface of the problem.

We need whole departments and agencies eliminated and a huge cut in both employee numbers and compensation packages.

Dusty on June 9, 2010 at 1:49 PM

I wouldn’t against a 10 to 20 year phase out. Please note: I am a home owner, but I don’t understand why I should get a tax break and renters don’t.

Oil Can on June 9, 2010 at 1:50 PM

the administration included it again in its 2010 budget — saying it could save $208 billion over the next decade.

And we all know how well the administration estimates savings.

PappaMac on June 9, 2010 at 1:50 PM

Oil Can, Renters also don’t have to pay the property taxes, which here in Ca. are high. Also the repairs and up-keep are not their responsibility.

sandee on June 9, 2010 at 1:51 PM

This will completely tank the housing market if it goes through. Who would believe they won’t significantly lower the $250,000 “means test” threshold over the life of the typical 30 year mortgage?

cool breeze on June 9, 2010 at 1:52 PM

Fire 50% of the federal government.

Close the federal Dept. of Energy, Education and Agriculture. Shrink all other government agencies except for the military.

Return unused stimulus funds immediately.

STOP. SPENDING. THERE IS NO MORE MONEY.

This is getting out of hand.

Good Lt on June 9, 2010 at 1:53 PM

What I should have stated. Get rid of the mortgage deduction, but I want a flat tax.

Oil Can on June 9, 2010 at 1:53 PM

Permanently eliminate all taxes on mortgages, period.

That conservative enough?

While we are at it, eliminate the Death Tax, or Estate Tax.

Gone. History. That’s conservative to me.

Brian1972 on June 9, 2010 at 1:53 PM

If this gets done, it should grandfather existing mortgages. People who have invested in a home and priced it believing the deduction would be there should not get shafted by the unpredictability of government. To a certain extent, taking away this deduction is almost a taking, since it drastically reduces the value of existing real estate investments.

Doodad Pro on June 9, 2010 at 1:53 PM

the administration included it again in its 2010 budget — saying it could save have $208 billion more to spend over the next decade.

FIFY

Daggett on June 9, 2010 at 1:53 PM

Good Lt on June 9, 2010 at 1:53 PM

That too..

Oil Can on June 9, 2010 at 1:54 PM

Eliminate my property tax, capital gains on the sale of property, and my social security tax and I’ll consider it.

SPCOlympics on June 9, 2010 at 1:54 PM

I know…How about they stop F***ing SPENDING…..

twiggman on June 9, 2010 at 1:55 PM

I saw on Luccianne that Obama was unveiling his 400 million dollar “aid?” package for the Palestinians today. Where is that money coming from? I also saw the picture of Obama and Abbas in the White House shaking hands, Sickening seeing as though he refused to allow any pictures of Bibis visit.

sandee on June 9, 2010 at 1:56 PM

The only reasonable way to end it is to grandfather it. The fact is people have made home purchases with this long-standing fact of tax law in the calculus. Changing it for a home they are currently in could have the effect of raising their mortgage payments by 20 or 30 percent, forcing more people into foreclosure, or at least forcing them to sell their homes.

At the same time, grandfathering it would have the effect of raising the price of a move by 20 or 30 percent, thus killing home sales.

The answer: phase it out in a straight line over ~30 years. A much smaller impact on household budgets, and no disincentive to buy/sell/refi/etc.

SoRight on June 9, 2010 at 1:56 PM

I don’t think that it’s social engineering and have nothing against responsible homeowners deducting their interest on mortgage payments from their taxes. What I do have a problem with is the gov’t helping delinquent homeowners stay in homes that they couldn’t afford in the first place using my tax dollars. I was responsible and lived within my means (despite the fact that I could have probably purchased a $300K condo for no money down in 2006) because I knew that this was not realistic on my salary ($45K/ year in Chicago means that you rent). I have little remorse for people who decided to purchase houses on salaries the same or less than mine or who decided to purchase McMansions for their first house instead of a two bedroom condo/townhouse. Why should I be paying for them their stupidity?

Illinidiva on June 9, 2010 at 1:56 PM

I wouldn’t against a 10 to 20 year phase out. Please note: I am a home owner, but I don’t understand why I should get a tax break and renters don’t.

Oil Can on June 9, 2010 at 1:50 PM

If they are good land lords, they don’t go up on the rent or they go down. When I rented and there was a decrease, which doesn’t happen often, she was nice enough to deduct it off the rent. Most are not like that.

upinak on June 9, 2010 at 1:56 PM

My house is paid for but changing the rules will not bring stability to the markets. Of course, that is the big plan.

jukin on June 9, 2010 at 1:57 PM

I wouldn’t against a 10 to 20 year phase out. Please note: I am a home owner, but I don’t understand why I should get a tax break and renters don’t.

Oil Can on June 9, 2010 at 1:50 PM

Renters do indirectly. The mortgage interest on a rental is deductible (to the owner) as a business expense. If they couldn’t deduct it, they’d have to charge a higher rent.

Besides, renters don’t pay property tax so it’s kind of break even anyway.

SPCOlympics on June 9, 2010 at 1:57 PM

Problem is that they are again looking for ways to increase revenue but completely ignore the real problem—-They spend too freakin’ much!

Also, this will only make homes harder to sell, thus lowering income of all those working in the industry (think about how many people are put to work when a house sells—carpenter, Realtor, lender, title officer, termite guy, escrow officer, etc. etc.) thus lowering the income tax the government gains, thus lowering revenue.

These people are economic idiots.

dirtseller on June 9, 2010 at 1:57 PM

I am a home owner, but I don’t understand why I should get a tax break and renters don’t.

[Oil Can on June 9, 2010 at 1:50 PM]

They do, in the rent. If you don’t believe me, just consider whether rents would change if the deduction was eliminated. (Caveat: This is not the same as the interest deduction on a loan (even though it is a home mortgage) for rental houses used as commercial property, though, if that interest deduction were also eliminated rents would rise in that sector, too.

Dusty on June 9, 2010 at 1:57 PM

Tell you what, let me know when Senator Chuck Schumer and the rest of the IndyMac scam crew that precipitated the crash get sent up the river, okay? I want to see that SOB perp-walked so bad I just might be willing to talk about it, after that.

drunyan8315 on June 9, 2010 at 1:57 PM

Oil Can on June 9, 2010 at 1:50 PM

Because you pay property taxes and renters don’t?

PappaMac on June 9, 2010 at 2:00 PM

senior Democratic lawmakers have argued they should be on the table for reform just like traditional entitlement programs Medicare, Social Security and Medicaid

I’ll say this slow so that you can understand. It’s. Not. Your. Freakin’. MONEY!!!!!!!

crazy_legs on June 9, 2010 at 2:00 PM

Let me guess, Congress did some polling and figured out that a greater percentage of homeowners vote Republican?

Maybe they just polled their large big-city base, which would be more likely to rent, no?

I am a home owner, but I don’t understand why I should get a tax break and renters don’t.

Someone owns it, do you think the landlord will just eat the extra cost? I suppose big guv will try to force him/her to.

reaganaut on June 9, 2010 at 2:00 PM

With education being what it is in America, there is a vast population that equate paying a mortgage with “owning” a home. Well, since only the rich could possibly own a house in America, it only makes sense that the “rich” should not be getting any tax breaks. Aren’t liberals geniuses?

ndanielson on June 9, 2010 at 2:01 PM

Oil Can, Renters also don’t have to pay the property taxes, which here in Ca. are high. Also the repairs and up-keep are not their responsibility.

sandee on June 9, 2010 at 1:51 PM

Are property taxes assessed on rental properties? If so, then you can be sure the renters are paying them indirectly.

Is the interest on commercial properties tax deductible?

ProfessorMiao on June 9, 2010 at 2:01 PM

They spend too freakin’ much!

Indeed.

Not only do they spend too much, they give too much away to certain segments of the population, while squeezing more and more out of folks who work for a living.

All part of the plan.

reaganaut on June 9, 2010 at 2:02 PM

Because you pay property taxes and renters don’t?

PappaMac on June 9, 2010 at 2:00 PM

When I owned rental property.. I made them pay it. I figured out the mortgage, the tax on it, the property tax for the city and everything else, divided it by the units and there you go.

I wasn’t a jerk about it either, I gave them a list of what they were paying for so they realized they weren’t getting screwed. If the mill rate lowered, I would let them know and bring down the rent if the assembly for the city raised the mill or added bons on the property tax I would let them know it too.

They were happy about it as it kept them in the loop. I wish I never got rid of that unit.

upinak on June 9, 2010 at 2:02 PM

Still, conservatives should consider whether the government should prop up the housing market at all with this incentive, which is in effect a redistribution of wealth to the landed.

Sorry, but there is no tax deduction at all that could possibly be considered redistribution of wealth. Allowing people to keep more of their own money is not redistribution unless you buy into the notion that they don’t deserve to keep it.

Jaynie59 on June 9, 2010 at 2:03 PM

Right. Because the housing market wasn’t totally destroyed by previous gubmint efforts.

bloviator on June 9, 2010 at 2:03 PM

I wouldn’t against a 10 to 20 year phase out. Please note: I am a home owner, but I don’t understand why I should get a tax break and renters don’t.

Oil Can on June 9, 2010 at 1:50 PM

+20,000 (about what I pay in taxes a year). I’m single male in my mid 20s and a renter. Do you know how much tax deductions I get to claim? I HATE taxes, I hate it even more when the government subsidizes some random economic decision of somebody else. Whether it’s buying property, popping children, or going to college. LOW FLAT TAX is fair. Pay the same rate, and in order to keep the budget balanced, reduce the sheer amount of deductions people and businesses can claim.

Apologetic California on June 9, 2010 at 2:03 PM

This won’t affect obama voters…they don’t own property, they live in Section 8/Public Housing…but, he’s sticking it to those people that work and save to purchase a home……those greedy bastaads.

HornetSting on June 9, 2010 at 2:03 PM

IF they (the proverbial THEY) don’t call it a tax, then Obama’s pledge hasn’t been broken.

/s

Sir Napsalot on June 9, 2010 at 2:03 PM

Here in Jefferson county, Missouri (right outside of St. Louis) we have voted for sales taxes to pay for fire and schools. This allows all to pay for the protection and education instead of just the homeowners.

This actually has created a boom in fire and ambulance houses and has upped the salaries of the firemen, EMTs and dispatchers.

Vince on June 9, 2010 at 2:03 PM

Are property taxes assessed on rental properties? If so, then you can be sure the renters are paying them indirectly.

Is the interest on commercial properties tax deductible?

ProfessorMiao on June 9, 2010 at 2:01 PM

Yes and yes*.

Actually the property tax on a rental is a little higher because many municipalities give you a lower rate if the home is owner occupied.

*Assuming proper tax planning of course.

SPCOlympics on June 9, 2010 at 2:05 PM

WitchDoctor on June 9, 2010 at 1:43 PM

+1

crazy_legs on June 9, 2010 at 2:05 PM

Although Congress last year rejected the White House’s proposed cut to the amount wealthier taxpayers can deduct for home mortgage interest payments, the administration included it again in its 2010 budget — saying it could save bring in $208 billion over the next decade.

Can we please stop the Orwellian nonsense of calling a tax hiking, “savings”? Such statements imply that my income and property actually belong to the government and the only question that needs to be decided is how much the government should let me keep rather than how much I’m going to let the government take away.

PackerBronco on June 9, 2010 at 2:05 PM

Pish pish.

Mortgage deductions are small potatoes.

Nationalizing 401(k)s is where the big action is.

BowHuntingTexas on June 9, 2010 at 2:05 PM

We had, a rental house.We paid taxes on it the same as our primary residence. We also had to carry insurance on it.

sandee on June 9, 2010 at 2:05 PM

Apologetic California on June 9, 2010 at 2:03 PM

Yeah, you’re not required to pay property taxes if you rent…seems fair to me…

HornetSting on June 9, 2010 at 2:05 PM

Apologetic California on June 9, 2010 at 2:03 PM

flat taxes on houses. Yeah what are you going to do. Go off the year it was built, by the sq footage and then have it divided by the amount of bathroom and bedrooms, but make sure to add on if their are garages.

Stop. You are a renter. If you don’t like it by a house and then complain about it.

upinak on June 9, 2010 at 2:05 PM

bleh

donkichi on June 9, 2010 at 2:07 PM

This actually has created a boom in fire and ambulance houses and has upped the salaries of the firemen, EMTs and dispatchers.

Vince on June 9, 2010 at 2:03 PM

yeah, but did they lower your property tax? And either way this is a federal tax deduction not a county/city deduction.

upinak on June 9, 2010 at 2:07 PM

More likely they first would end the Second Mortgage Interest deduction, that the rich justify purchasing Second vacation homes with.

If they take the whole thing away, how many more foreclosers happen given the amount of people already upside down in their mortgages? Might as well walk away at that point and just Rent

Why isn’t “Move to Costa Rica” an option in the poll? Or Panama were they will let you avoid Property Tax for 20 yrs

jp on June 9, 2010 at 2:07 PM

Nationalizing 401(k)s is where the big action is.

BowHuntingTexas on June 9, 2010 at 2:05 PM

Absolutely…when you’re watching the hand creeping up your thigh, obama already has his hand down your pants…..

HornetSting on June 9, 2010 at 2:08 PM

I’m mortgage-free so maybe I have no business answering this question, but I say get rid of it. Get rid of the mortgage deduction, the student loan deduction — all interest deductions. It only encourages debt. As a matter of fact, let’s get rid of the entire tax code and start over with a fair tax.

NoLeftTurn on June 9, 2010 at 2:08 PM

Because you pay property taxes and renters don’t?

PappaMac on June 9, 2010 at 2:00 PM

You don’t think the property tax is factored in my rent? You’re kidding, right?

Who is John Galt on June 9, 2010 at 2:09 PM

YHGTBFKM. This is nickle and dime stuff, folks. Has anyone in government ever heard of the Pareto Principle? Tackle the big problems first, then go after smaller stuff like this.

Our national debt is surging towards $19 TRILLION and Congress is debating the cost-effectiveness of a tax credit that would generate $20.8 billion in savings per year? Really? $20 billion isn’t even a rounding error.

We’re never going to significantly reduce our debt and balance the budget by tackling piddly line items like this while the big ticket items like Medicaid and Social Security swamp us.

rcpjr on June 9, 2010 at 2:09 PM

NoLeftTurn on June 9, 2010 at 2:08 PM

Okay no left, I am going to ask you then. So youbuy a new house. WOuld you go with the deduction like they have now OR would you try to do a fair tax on a new house and how would you do it.

upinak on June 9, 2010 at 2:09 PM

And Obama wants to send $400 Million to Palestinians. Yeah the mortgage decutions should go. The American People don’t need those deductions.

PappaMac on June 9, 2010 at 2:09 PM

sandee, Renters pay the property tax and upkeep costs indirectly through their rent payments. Landlords factor these costs into the rental rates. Property taxes are high in CA, consequently rents are high too.
The major difference between renting and owning is equity-building.

kooly on June 9, 2010 at 2:10 PM

I hate it even more when the government subsidizes some random economic decision of somebody else

:sigh: You have to pick your battles. I’m not sure where we got the point where tax credit on mortgage interest is somehow a subsidy.

What’s next, 401ks? Oh, wait…

When responsible homeowners pay their mortgage on time it helps the economy as a whole. It helps the banks, home improvement stores, lawn and garden stores, real estate agents, landscapers, the guy who plows your driveway, plumbers, electricians, painters, siders, roofers, home security salesmen, pet stores and animal shelters – need I go on?

reaganaut on June 9, 2010 at 2:10 PM

This is a great example of Libertarian Philosophy vs. the Real world.

Given Econ 101 common sense, the Mortgage Interest Deduction is bad policy and goes against libertarain economic princples……However, nearly any Mortgage owner who is not wealthy, many of whom are certainly libertarian economicly in policy preference, would have a really tough time supporting actually doing this. Unless they were filthy rich and could afford this change.

jp on June 9, 2010 at 2:11 PM

I would add, though, this is probably not the time to do it. Eliminating deductions is something you tackle when times are good, not when people are already hurting.

NoLeftTurn on June 9, 2010 at 2:11 PM

But effectively the mortgage deduction is already capped. When you calculate all of your deductions on your 1040 schedule A you do a quickie calculation to see if 100% of those deductions can be applied based on your income. Similarly, the Alternative Minimum Tax exists precisely to sock it to “high” income households so that they may not get use out of traditional tax deductions like the mortgage deduction.

We’re just talking about lowering the ceiling. And yes, it will annihilate home values and drive even more people into foreclosure as a result. And yes, it’s a stupid idea. You want economic turnaround? Incentivize people to invest in the economy by buying a stake, eg a house. The benefits of an ownership society are clear.

JohnTant on June 9, 2010 at 2:12 PM

Last one out of Los Angeles, turn-out the lights when you leave

phreshone on June 9, 2010 at 2:12 PM

While we are at it, eliminate the Death Tax, or Estate Tax.

Gone. History. That’s conservative to me.

Brian1972 on June 9, 2010 at 1:53 PM

For 6 years, we had the WH and congress. And they didn’t eliminate this abomination of taxing money that has already been taxed.

To me, it’s one of the biggest reminders that Republicans are just as much to blame for the state of this country as Democrats and why we need new blood in as many offices as we can get.

DrAllecon on June 9, 2010 at 2:13 PM

Kooly, equity-building? That was a thing of the past. The housing crash ended that. The property taxes, however are pretty much the same. The County hasn’t reduced those by much. Houses in my neck of the woods have lost about 35% of their value.Lots of people are upside down on their mortgages.

sandee on June 9, 2010 at 2:13 PM

It is foolish to touch this deduction without addressing the myriad of other deductions, credits, and exemptions in the tax code.

Y-not on June 9, 2010 at 2:13 PM

Obama the Destroyer

faraway on June 9, 2010 at 2:14 PM

My idea to go toward a flat tax eventually: get rid of the deduction on all FUTURE purchases, but allow it to remain for mortgages active as of the date that the bill (should it ever get written) gets signed into law. The last thing our housing market needs right now is a new flood of McMansions arriving on the short sale and foreclosure markets thanks to the economic fallout of such a large tax increase.

flutejpl on June 9, 2010 at 2:14 PM

Besides, renters don’t pay property tax so it’s kind of break even anyway.

SPCOlympics on June 9, 2010 at 1:57 PM

They do pay property taxes indirectly. I have a rental property. The costs of all taxes and insurance are figured into the monthly rent.

stvnscott on June 9, 2010 at 2:14 PM

PappaMac on June 9, 2010 at 2:00 PM
You don’t think the property tax is factored in my rent? You’re kidding, right?

Who is John Galt on June 9, 2010 at 2:09 PM

That’s between you and your landlord…if you choose to rent, you are at their mercy.

HornetSting on June 9, 2010 at 2:14 PM

They do pay property taxes indirectly. I have a rental property. The costs of all taxes and insurance are figured into the monthly rent.

stvnscott on June 9, 2010 at 2:14 PM

Don’t bother. No one is reading what we are writting them and telling them.

upinak on June 9, 2010 at 2:15 PM

yeah, but did they lower your property tax? And either way this is a federal tax deduction not a county/city deduction.

upinak on June 9, 2010 at 2:07 PM

Yep! Property taxes were lowered and keep getting lowered because of new businesses in this county. The fire houses are being paid for with no mortgages.

I would keep the mortgage deduction as long as we have this system of Federal income tax. If there isn’t reduced spending, we vote them out of office.

Vince on June 9, 2010 at 2:15 PM

We’ll never get to a flat tax, ever.

I have no problems with all the deductions available, it’s the only thing that keeps the tax laws being completely unacceptable.

Getting rid of deductions is just another method of wealth resditribution.

reaganaut on June 9, 2010 at 2:15 PM

While we are at it, eliminate the Death Tax, or Estate Tax.

Gone. History. That’s conservative to me.

Brian1972 on June 9, 2010 at 1:53 PM

Don’t forget the gift tax!

“Oh, you won the lottery? Great! Give me my 50%! ‘Kthanks! Love, the IRS.”

NoLeftTurn on June 9, 2010 at 2:16 PM

Nationalizing 401(k)s is where the big action is.

BowHuntingTexas on June 9, 2010 at 2:05 PM

Is that true? Do you have link to the article?

Oil Can on June 9, 2010 at 2:16 PM

I know…How about they stop F***ing SPENDING…..

twiggman on June 9, 2010 at 1:55 PM

Ding ding ding. You are the winner for today!

search4truth on June 9, 2010 at 2:17 PM

They do pay property taxes indirectly. I have a rental property. The costs of all taxes and insurance are figured into the monthly rent.

stvnscott on June 9, 2010 at 2:14 PM

This is true, more so under old conditions. If I wanted to rent my place(bought in 2008) I’d have to rent it for less than my monthly payments. In fact, I know someone who bought a townhome in summer of 2008, got a better job in ATL a month later and had to move as housing market was crashing. They are taking a $500 per month hit between their mortgage payment and market rental rate at the moment.

jp on June 9, 2010 at 2:17 PM

This is only a good idea if we completely restructure the tax code, install the flat tax, eliminate tax deductions completely, and end the income tax.

Otherwise, this is just another special interest shell game.

Saltysam on June 9, 2010 at 2:17 PM

That’s between you and your landlord…if you choose to rent, you are at their mercy.

HornetSting on June 9, 2010 at 2:14 PM

Not really. Any landlord knows that a rental is a income property and to make anything and make sure to keep the value of the property up you have to charge 20% more then the overall costs.

I had a 6 plex a long time ago. I charge 850 a month for 2 bd 2 bt 1200 sq ft units. They all had w/d and dishwashers. They were very nice units and a good deal for the rent. My mortgage wasn’t high so I didn’t charge them all an arm and a leg, but I did let them know why I went up on the rent when something was voted in. They paid the utlities. It worked out quite well…..

upinak on June 9, 2010 at 2:18 PM

I wouldn’t against a 10 to 20 year phase out. Please note: I am a home owner, but I don’t understand why I should get a tax break and renters don’t.

Oil Can on June 9, 2010 at 1:50 PM

The owners of rental units pay the property taxes. That’s included in the rent, along with any utilities and services the owner decides. Some rents include water, heat, even cable TV as part of the rent. It depends.

The people who really get screwed are condo owners. They have the worst of both worlds. They have a mortgage, and condo or HOA fees that are not deductable. And they get the wonderful apartment-like living environment. Why anyone who can afford a house buys a condo is beyond me. There is nothing you can’t pay someone to do that is more than a condo fee.

Jaynie59 on June 9, 2010 at 2:19 PM

Cut spending, lower taxes, flatten tax rates, eliminate deductions and interests. A 1040 should be one-page and this is how the tax you owe is calculated: Income x .20 = Gubmint.

Apologetic California on June 9, 2010 at 2:19 PM

If you think Social Security is ‘the third rail’ of politics, just wait until they start screwing with the mortgage deduction.

Just after you vote for killing that deduction, put a gun in your mouth and pull the trigger. Come next election cycle you’ll be dead meat anyway.

GarandFan on June 9, 2010 at 2:20 PM

Jaynie59 on June 9, 2010 at 2:19 PM

people who don’t want lawns. I hate my condo.. I can’t wait to sell the POS. But I bought it for my Mom who is now regretting it due to the condo asso. Ugh don’t get me started.

upinak on June 9, 2010 at 2:21 PM

The people who really get screwed are condo owners. They have the worst of both worlds. They have a mortgage, and condo or HOA fees that are not deductable. And they get the wonderful apartment-like living environment. Why anyone who can afford a house buys a condo is beyond me. There is nothing you can’t pay someone to do that is more than a condo fee.

Jaynie59 on June 9, 2010 at 2:19 PM

Many of the desirable housing units are not SFR, especially if you’re particular about neighborhoods. In LA, the worst neighborhoods in South Central are just nothing but single-family homes. You have to live in a city to understand that. Also, condos are not always apartment-like buildings. Like in Palm Springs where you couldn’t tell the condos from the single-family homes.

Apologetic California on June 9, 2010 at 2:23 PM

Okay no left, I am going to ask you then. So youbuy a new house. WOuld you go with the deduction like they have now OR would you try to do a fair tax on a new house and how would you do it.

upinak on June 9, 2010 at 2:09 PM

Well, Neil Boortz would tell you that you’d pay your 23% tax on it. Theoretically, prices and incomes should reflect the fact that there is going to be a tax on the sale. At least that’s what the fair tax advocates say. Whether that would actually happen in reality, I don’t know. But I can tell you this: When I did buy my house and I was paying a mortgage, the deduction wasn’t really a factor in my decision to buy. The price was right, the location was right, and the time was right. That’s why I did it. I’m not getting the deduction anymore but the house has a whole lot more value to me as something I own outright than it does as something that knocks a few grand off my taxable income every year.

Of course, my cost of living here is much, much lower than yours. But this is yet another reason I argue for a fair tax (or a flat tax — I’d take either over the monstrosity we have right now). We treat Alaskans the same way we treat Arkansans. Not really fair to folks like yourself, if you ask me. My income goes much further than yours does I’m sure.

NoLeftTurn on June 9, 2010 at 2:23 PM

These slug slimes in dc are working 24/7 trying to figure out how to tax us more and get money. They are not about to stop spending, just tax more.
Yes, they have floated taxing the 401 and IRA. They tried it with bc, it failed, and now are looking at it again. There are trillions of dollars these slugs can not get their slimy hands on and they want it!
L

letget on June 9, 2010 at 2:24 PM

upinak on June 9, 2010 at 2:18 PM

That’s all fine, but my point was that I cannot negotiate my taxes with the tax assessor, you can negotiate your rent with a landlord, but you have to know that you are paying their mortgage and then some….

HornetSting on June 9, 2010 at 2:25 PM

Seems silly to eliminate the mortgage deduction while at the same time pumping up the housing bubble with hundreds of trillions of freshly printed dollars each year.

I just looked… We can refinance 80% of the value of our home for 15 years at 4.25% APR with nothing down thanks to the FHA. I need to get busy before this house of cards crashes.

elfman on June 9, 2010 at 2:25 PM

Nationalizing 401(k)s is where the big action is.

BowHuntingTexas on June 9, 2010 at 2:05 PM

Is that true? Do you have link to the article?

Oil Can on June 9, 2010 at 2:16 PM

They’ve been hinting around about this since the day after Kickass was elected.

NoLeftTurn on June 9, 2010 at 2:25 PM

It’s a distraction anyway. Watch out for the real taxes.

faraway on June 9, 2010 at 2:26 PM

Cut spending, lower taxes, flatten tax rates, eliminate deductions and interests. A 1040 should be one-page and this is how the tax you owe is calculated: Income x .20 = Gubmint.

Apologetic California on June 9, 2010 at 2:19 PM

Agreed.

HornetSting on June 9, 2010 at 2:26 PM

getting rid of the mortgage interest deduction certainly should be part of the conservative agenda. BUT only down the road much further. this commission is only looking at ways to wring more revenue out of the people. it needs to look at reducing spending, thats the problem. get gov’t spending and size way down, reduce entitlement programs, etc. and then lets talk about this deduction.

chasdal on June 9, 2010 at 2:28 PM

I paid off my primary mortage in 10 years and the mortgage on my second home in 6. My next home will be cash and no mortgage.
I still suggest a mortgage deduction. It comes back in construction jobs.

seven on June 9, 2010 at 2:30 PM

Lots of middle class families have one thing – their home.

They rely big time on that mortgage deduction. They live in the homes with their children. They are also the backbone of society.

This will hurt all those average, ordinary, hard-working Americans. The ones who played by the rules. The ones who follow the law. And most of them are not out taking vacations and eating at fancy restaurants.

Sticking it to them won’t help anyone. At all.

Alana on June 9, 2010 at 2:30 PM

This is basic economics, folks. An apartment is a product the renter is buying. It has a pretty stable price/range, and variations for “manufacturer”, location, and sales mission, but the number crunching is all the same. You add up the costs, top it off with profit (which is the “manufacturer’s” salary and risk/headache markup) and wa-la, you have the rent, suitably portioned to the number of renters. If anything changes, that will eventually filter down to the rent.

Renters pay for everything and renters take advantage of everything, except for any asset appreciation realized by the sale of the business (meaning rental property).

Dusty on June 9, 2010 at 2:30 PM

If you think Social Security is ‘the third rail’ of politics, just wait until they start screwing with the mortgage deduction.

Just after you vote for killing that deduction, put a gun in your mouth and pull the trigger. Come next election cycle you’ll be dead meat anyway.

GarandFan on June 9, 2010 at 2:20 PM

People don’t just love their welfare, they believe they are entitled to it.

exception on June 9, 2010 at 2:31 PM

people who don’t want lawns. I hate my condo.. I can’t wait to sell the POS. But I bought it for my Mom who is now regretting it due to the condo asso. Ugh don’t get me started.

upinak on June 9, 2010 at 2:21 PM

I know. I’m trying to talk my sister out of it now.

I live in Mass and I pay $40 a week in the summer to have my lawn mowed and $40 a storm in the winter to have my driveway and walk cleared of snow. It averages out to about $120 a month. Some months it doesn’t cost me anything.

My sister is looking at a condo development where the fee is $350 a month. I keep telling her she’s nuts. But she doesn’t want to have to worry about any of it anymore. It depends on what that kind of peace of mind is worth to you.

Jaynie59 on June 9, 2010 at 2:32 PM

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